Indonesia Corporate Income Tax Guide 2026: 22% Rate & SME Discounts
Operating a domestic company (PT) or foreign direct investment company (PT PMA) in Indonesia requires a thorough understanding of Indonesian corporate income tax (PPh Badan) rates, small business tax incentives, withholding obligations, and DJP reporting rules.
1. Headline 22% Corporate Tax Rate
Administered by the Direktorat Jenderal Pajak (DJP), domestic corporations and Permanent Establishments (BUT) are subject to a flat 22% headline corporate income tax rate on net taxable income.
2. Article 31E 50% Tax Reduction for SMEs
Under Article 31E of the Income Tax Law, domestic corporations with annual gross turnover up to IDR 50 billion enjoy a 50% tax rate reduction (resulting in an effective 11% corporate tax rate) on taxable income derived from turnover up to IDR 4.8 billion.
| Annual Corporate Gross Revenue | Applicable Tax Incentive | Effective Corporate Tax Rate |
|---|---|---|
| Up to IDR 4.8 Billion | Full Article 31E 50% Discount (or 0.5% PP 55) | 11% (or 0.5% of Gross Turnover) |
| IDR 4.8 Billion – IDR 50 Billion | Proportional Article 31E 50% Discount | Proportional between 11% and 22% |
| Exceeding IDR 50 Billion | Standard Headline Corporate Rate | 22% Flat Rate |
3. 0.5% Final Micro-Business Turnover Tax (PP 55/2022)
Small businesses with annual turnover under IDR 4.8 billion can elect to pay a flat 0.5% final tax on gross monthly turnover for up to 3 years (for PT companies) or 4 years (for CV partnerships) to simplify early tax compliance.
4. Corporate Withholding Taxes
Indonesian companies act as withholding agents for DJP:
- PPh 23: 2% withholding tax on domestic services and rental of assets (other than land/buildings), and 15% on dividends/interest paid to resident entities without NPWP penalty.
- PPh 4(2) Final Tax: 10% final withholding on land/building rental and 2.5% on construction services.
5. Corporate SPT 1771 e-Filing & Deadlines
Corporate taxpayers must submit their annual tax return (SPT Tahunan 1771) online via DJP Online by April 30. Failure to file on time triggers a statutory penalty of IDR 1,000,000.
6. Frequently Asked Questions
What is the corporate tax rate in Indonesia?
The headline rate is 22%. SMEs get 50% rate discounts under Article 31E or 0.5% final turnover tax options.
When is corporate SPT 1771 due?
Annual corporate tax returns must be filed electronically by April 30.